1. The document discusses the relationship between bankers and customers. It defines a banker as a person who provides financial banking services and works in a bank. A customer is the recipient of goods, services, or products from a seller or supplier via a financial transaction. 2. The relationship between bankers and customers involves different roles - debtor and creditor when a customer deposits money in their bank account, pledger and pledgee when a customer pledges assets for a loan, and agent and principal when a banker performs services on a customer's behalf like buying securities. 3. Bankers also have obligations to customers like honoring checks if funds are available, maintaining secrecy of customer accounts, and charging incidental fees for

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BANKER & CUSTOMER RELATIONSHIP
Presented by:
Dr M.Annam
Assistant Professor,
Department of Commerce.
V.V.Vanniaperumal College for Women,Virudhunagar,
Tamil Nadu.

2. Banker may refer to:
1. a person who provides
financial banking services and typically works in a bank
2. a person providing financial services in
ancient Greece and Rome
BAKING SERVICES:
A bank is a financial institution that
accepts deposits from the public and creates credit. Lending
activities can be performed either directly or indirectly
through capital markets. Most nations have institutionalized a
system known as fractional reserve banking under which banks
hold liquid assets equal to only a portion of their current
liabilities.
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WHO IS A BANKER ?

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WHO IS CUSTOMER
In sales, commerce and economics, a customer (sometimes known as
a client, buyer, or purchaser) is the recipient of a good, service, product or
an idea - obtained from a seller, vendor, or supplier via a financial
transaction or exchange for money or some other valuable consideration.[1][
Clients who habitually return to a
seller develop customs that allow
for regular, sustained commerce
that allows the seller to develop
statistical models to
optimize production processes

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Relationship as Debtor and Creditor
On the opening of an account, the banker assumes the position of a debtor. A depositor remains a
creditor of his banker so long as his account carries a credit balance.
The relationship with the customer is reserved as soon as the customer account is overdrawn.
Banker becomes a creditor of the customer who has taken a loan from the banker and continues
in that capacity fills the loan is repaid.
Banker as a Trustee
Ordinally a banker is a debtor of his customer in the report of the deposit made by the letter but
in certain circumstances, he acts as trustee also.
A trustee hold holds money or asset and performs certain functions for the benefit of some other
person called the beneficiary.
For example;
If the customer deposits securities or other values with the banker for the safe custody, the letter
acts as a trustee of his customer.
Banker as an Agent
A banker acts as an agent of his customer and performs a number of agency functions for the
conveniences of his customer.
For example, he buys or sells securities on behalf of his customer, collects check/cheques on his
behalf and makes payment of various dues of his customer.

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1. Relationship of Debtor and Creditor
A customer remains a creditor until there is credit balance in his account with the banker. A customer
(creditor) does not get any charge over the assets of the banker (debtor). The customer's status is that of
an unsecured creditor of the banker. The debtor-creditor relationship of banker and customer differs from
other commercial debts in the following ways:
1.The creditor (the customer) must demand payment. On his own, the debtor (banker) will not repay the
debt. However, in case of fixed deposits, the bank must inform a customer about maturity.
2.The creditor must demand the payment at the right time and place. The depositor or creditor must
demand the payment at the branch of the bank, where he has opened the account. However, today, some
banks allow payment at all their branches and ATM centres. The depositor must demand the payment at
the right time (during the working hours) and on the date of maturity in the case of fixed deposits. Today,
banks also allow pre-mature withdrawals.
3.The creditor must make the demand for payment in a proper manner. The demand must be in form of
cheques; withdrawal slips, or pay order. Now-a-days, banks allow e-banking, ATM, mobile-banking, etc.

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2. Relationship of Pledger and Pledgee
The relationship between customer and banker can be that of Pledger and Pledgee.
This happens when customer pledges (promises) certain assets or security with the bank in
order to get a loan. In this case, the customer becomes the Pledger, and the bank becomes the
Pledgee. Under this agreement, the assets or security will remain with the bank until a
customer repays the loan.
3. Relationship of Licensor and Licensee
The relationship between banker and customer can be that of a Licensor and
Licensee. This happens when the banker gives a sale deposit locker to the customer. So, the
banker will become the Licensor, and the customer will become the Licensee.
4. Relationship of Bailor and Bailee
The relationship between banker and customer can be that of Bailor and Bailee.
a. Bailment is a contract for delivering goods by one party to another to be held in trust
for a specific period and returned when the purpose is ended.
b. Bailor is the party that delivers property to another.
c. Bailee is the party to whom the property is delivered.
So, when a customer gives a sealed box to the bank for safe keeping, the customer became
the bailor, and the bank became the bailee.

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5. Relationship of Hypothecator and Hypothecatee
The relationship between customer and banker can be that of Hypothecator and
Hypotheatee. This happens when the customer hypothecates (pledges) certain movable or
non-movable property or assets with the banker in order to get a loan. In this case, the
customer became the Hypothecator, and the Banker became the Hypothecatee.
6. Relationship of Trustee and Beneficiary
A trustee holds property for the beneficiary, and the profit earned from this
property belongs to the beneficiary. If the customer deposits securities or valuables with the
banker for safe custody, banker becomes a trustee of his customer. The customer is the
beneficiary so the ownership remains with the customer.
7. Relationship of Agent and Principal
the banker acts as an agent of the customer (principal) by providing the following
agency services:
a. buying and selling securities on his behalf,
b. collection of cheques, dividends, bills or promissory notes on his behalf, and
c. acting as a trustee, attorney, executor, correspondent or representative of a customer.
banker as an agent performs many other functions such as payment of insurance premium,
electricity and gas bills, handling tax problems, etc.

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8. Relationship of Advisor and Client
When a customer invests in securities, the banker acts as an advisor. The advice can be given
officially or unofficially. While giving advice the banker has to take maximum care and caution.
Here, the banker is an Advisor, and the customer is a Client.
9. Other Relationships
Other miscellaneous banker-customer relationships are as follows:
a. Obligation to honour cheques : As long as there is sufficient balance in the account of the
customer, the banker must honour all his cheques. The cheques must be complete and in
proper order. They must be presented within six months from the date of issue. However,
the banker can refuse to honour the cheques only in certain cases.
b. Secrecy of customer's account : When a customer opens an account in a bank, the banker
must not give information about the customer's account to others.
c. Banker's right to claim incidental charges : A banker has a right to charge a commission,
interest or other charges for the various services given by him to the customer. For e.g. an
overdraft facility.
d. Law of limitation on bank deposits : Under the law of limitation, generally, a customer
gives up the right to recover the amount due at a banker if he has not operated his account
since last 10 years.
So, these were some important banker-customer relationships.

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Special relationship with customer/obligation of a banker:
Through the primary relationship between a banker and his customer is that of a debtor
and a creditor or vice versa, the special features of this relationship as a note above
impose the following additional obligations on the banker.
The obligation to honor the Check/Cheques
The deposit accepted by a banker is his liabilities repayable on demand or otherwise.
The banker is therefore under a statutory obligation to honor his customer’s
check/cheque in the usual course.
According to section 31 of the negotiable instruments. Act 1881 the banker is bound to
honor his customer’s check/cheque provided by following conditions are fulfilled:
a. Availability of sufficient funds of the customer.
b. The correctness of the check/cheque.
c. Proper presentation of the check/cheque.
d. A reasonable time for collection.
e. Proper drawing of the check/cheque.

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The obligation to maintain the secrecy of the customer accounts
The banker is an obligation to take the utmost care in keeping secrecy about the account of his
customer.
By keeping secrecy is that the account books of the bank will not be thrown open to the public
or government, officials if the following reasonable situation does not occur,
1.Discloser of information required by law.
2.Discloser permitted by bankers’ practice and wages.
The practice and wages are customary amongst bankers permit disclosure of certain
information and the following circumstances.
•With express or implied consent of the customer.
•Banker reference.
•Duty to the public to disclose.

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